Last checked at 27 Oct 2008 07:00
GETECH Group plc
("GETECH", the "Company" or the "Group")
Preliminary results
for the year ended 31 July 2008
GETECH Group plc (AIM: GTC), a leading oil services business specialising in the provision of data, studies and interpretation services to the oil and mining exploration sectors, announces its preliminary results for the year ended 31 July 2008.
GETECH operates in three areas:
Licensing global gravity and magnetic data to oil and mineral companies;
Undertaking proprietary geophysical service work; and
Development and sale of studies evaluating the structure and petroleum systems of hydrocarbon basins.
Financial Highlights:
Revenue up 15.9% to £4.13m (2007: £3.56m)
Profit before tax up 11.7% to £0.9m (2007: £0.81m)
EPS up 19.2% to 2.17p (2007: 1.82p)
Cash up 79.8% to £1.69m (2007: £0.94m)
Proposed final dividend of 0.7p making a total of 1.3p for the year (2007: 1.2p)
Net assets of £4.65m
Operational Highlights:
Major Russian Arctic Shelf aeromagnetic data sale in H1 worth c. £900,000
Demand for data remains strong
Geological studies (including those formerly referred to as PSEG studies) continue to sell well
Major new studies to be released in 2008/9
Staff numbers increased to almost 50
IP Group Plc increased investment to 20%
Commenting on outlook, Peter Stephens, Non-Executive Chairman of GETECH Group plc, said:
"We anticipate that the demand for gravity and magnetic data will continue to remain strong. With the acquisition of additional data marketing rights during the year, we expect this area to continue to provide a major revenue stream.
The feedback from our latest geological studies is very positive and we are optimistic about sales in the coming year. Marketing of the South Atlantic study (our largest study to date) commenced in September 2008 and initial reaction to this product is very favourable. Further major studies over East Africa, CircumߛArctic, Taoudenni Basin and South East China are planned to be completed and marketed in the first half of 2008/9."
For further information:
| GETECH Group plc | |
| Raymond Wolfson, Chief Executive Officer | 0113 322 2211 |
| WH Ireland | |
| Katy Mitchell | 0161 819 8875 |
| Parkgreen Communications Ltd | |
| Paul McManus | paul.mcmanus@parkgreenmedia.com 020 7933 8787 or 07980 541 893 |
| Ben Knowles | ben.knowles@parkgreenmedia.com 020 7933 8788 or 07900 514 242 |
Chairman's statement
I am pleased to report the third full year results, since its Admission to AIM, of GETECH Group plc and its subsidiary company for the year ended 31 July 2008. GETECH is an oil services business specialising in the provision of data, studies and services to the oil and mining exploration sectors.
Results
GETECH reported a Group profit before tax of £900,000 (2007: £805,399) after interest receivable of £78,612 (2007: £158,946) on revenue of £4,125,981 (2007: £3,561,159). The postߛtax profit was £601,571 (2007: £504,431) giving earnings per share of 2.17p (2007: 1.82p).
The accounts have been prepared under International Financial Reporting Standards (IFRS).
Dividends
The Company is proposing a final dividend of 0.7p to make 1.3p for the year, subject to shareholder approval at the Annual General Meeting on 27 November 2008. This will be paid to shareholders on the register on 7 November 2008. It will cost £193,846 and be payable on 5 December 2008. This dividend payment is in line with GETECH's commitment to a progressive dividend policy.
Business review
In line with our expectations, GETECH obtained a second order for the Russian Arctic Shelf aeromagnetic data and this was delivered and invoiced in December 2007 at a gross price close to £900,000.
We completed a number of significant new trading arrangements during the year. Most notable were additional Russian marketing agreements covering various regions within the Former Soviet Union, and new agreements for marketing gravity and magnetic data. An agreement under which GETECH will undertake gravity data surveys in Brazil and Chile was also signed and new studies in the Taoudenni Basin (Mauritania and Mali) were initiated.
The market for gravity and magnetic data continued to be strong and revenue from data licences in the second half of the year exceeded expectations. In addition, a number of new proprietary geophysics projects were awarded in the second half of the year.
Our geological activities have now grown both in size and in the range of specialist technical disciplines, to such an extent that we no longer refer to them under the title "Petroleum Systems Evaluation Group" (PSEG). This expanded geological group is ably led by Dr Paul Markwick and now consists of almost 20 specialists in several fields including Structural Geology, Plate Tectonic Modelling, Geodynamics, Palaeoclimatology and Palaeogeography. The teams worked on several major projects during the year, the first of which (the South Atlantic study) was completed after the year end in August. These geological activities continue to complement GETECH's strong original business - the collation, analysis and interpretation of magnetic and gravity data.
Management and staff
The Company has continued to grow during the year and has expanded to almost 50 staff. As a result we have needed to occupy a further part of our new building (Nicholson House). This provides an excellent working environment for the staff.
Acquisitions
We continue to seek suitable acquisitions and have considered opportunities both in the UK and US in the year under review.
Substantial new shareholder
We are delighted that IP Group plc, a London Stock Exchange listed company, has significantly increased its investment in GETECH to 20%. Following this substantial commitment, the Board of GETECH is pleased to welcome Charles Tavner of IP Group as a nonߛexecutive Director, with effect from 4 September 2008. IP Group's core business is the creation of value for its shareholders and partners through the commercialisation of intellectual property originating from researchߛintensive institutions. Their skills in maximising the commercial potential of intellectual property will undoubtedly benefit GETECH, both as it is now and as it evolves over time.
Outlook
We anticipate that the demand for gravity and magnetic data will continue to remain strong. With the acquisition of additional data marketing rights during the year, we expect this area to continue to provide a major revenue stream.
The feedback from our latest geological studies is very positive and we are optimistic about sales in the coming year. Marketing of the South Atlantic study (our largest study to date) commenced in September 2008 and initial reaction to this product is very favourable. Further major studies over East Africa, CircumߛArctic, Taoudenni Basin and South East China are planned to be completed and marketed in the first half of 2008/9.
Finally, I would like to thank the staff and my fellow Directors for all their hard work during the year.
Peter Stephens
Non-executive Chairman
Operating review
We are pleased to report that in our third year as a public quoted company, GETECH Group plc and its subsidiary company returned a preߛtax profit of £900,000 (2007: £805,399) for the year ended 31 July 2008.
Business setting
Hydrocarbon exploration is continuing to experience significant investment due to the need for oil and gas companies to replace their depleting reserves. This has resulted in oil and gas companies searching more widely for new resources and, consequently, many companies are entering countries for the first time in search of hydrocarbon exploration opportunities. Our global range of products and services provides these companies with the exploration data and knowledge they require in a cost effective manner and in a way that will help them to reduce their exploration risk.
GETECH's products and interpretation services have been developed over more than 20 years, in which time the Company has compiled one of the world's most extensive global gravity and magnetic databases. These data enable regional and local imaging of the subsurface geology and structure which results from the spatial subsurface changes in rock density (gravity) and rock magnetisation (magnetic). Qualitative and quantitative analyses of these data, constrained by seismic reflection and well log data, enable the threeߛdimensional mapping of tectonic structures and sedimentary basin architecture. The geological side of the business (formerly referred to as the "Petroleum Systems Evaluation Group" (PSEG)) now offers a wider range of specialist skills. It uses the available geophysical data and expertise, together with a broad range of geological data and innovative methods, to assess the hydrocarbon potential of basins and present their findings in the form of comprehensive regional studies. Oil and mining companies license our data and studies when they are evaluating new exploration areas and/or when they wish to expand their current exploration activities into neighbouring regions.
Company history
GETECH has its origins as a research group at the University of Leeds, Department of Earth Sciences (now part of the School of Earth and Environment). It started in 1986 by initiating the compilation of gravity data for the continent of Africa, supported by a group of international oil and mining company sponsors.
In 1996, GETECH opened an office in Houston, Texas. In 2000, GETECH spun out from the University of Leeds as a private company (Geophysical Exploration Technology Limited) and subsequent business success and the formation of PSEG in 2004 resulted in the flotation of the Company on AIM in September 2005, with a name change to GETECH Group plc. GETECH was the first spin-out company from the University of Leeds to float on AIM.
Business activities
GETECH's business can be described as:
| licensing global gravity and magnetic data to oil and mineral companies; |
| undertaking proprietary geophysical service work; and |
| development and sale of studies evaluating the structure and petroleum systems of hydrocarbon basins. |
During the year we signed several substantial licences for data from our global gravity database as well as the licence for our aeromagnetic database covering the Russian Arctic continental shelf. We were also awarded a significant contract which included licensing of data and the compilation of a new magnetic database for South East Asia as a pilot for a much larger study.
Proprietary service work during the year saw the successful completion of the South East Asia marine data processing contract and a steady stream of interpretation studies commissioned by a range of oil companies. We expect the demand for our interpretation services to remain strong throughout the next twelve months. Included in this sector is the major Shell Research and Development study, which is a twoߛyear project due to be completed in December 2008. This has led to significant advances in magnetic data analysis methods which are now yielding results that relate closely to those predicted by heat flow methods.
The PSEG was originally set up to provide oil companies with detailed insights into the key source, reservoir and seal issues relating to hydrocarbon basins. Since 2004 this activity has grown from 2 staff to close to 20, and has evolved into a multidisciplinary team with a broad range of specialist skills that are highly attractive to our clients - to such an extent that the original name for the group is now inappropriately narrow. We continued to develop our initiative in South East Asia and completed the Southern Indochina study during the year. This has sold strongly, and we have now started a new South East China study to expand further our coverage. These studies link together with our earlier studies and provide a seamless set of petroleum basins analysis reports for Indochina. The demand for these reports reflects the strong position we have established in the market place. In the year we launched a new fully funded nonߛexclusive study of the Taoudenni Basin, extending from Mauritania into Mali.
The future
Our prognosis for the current year is for strong demand for data, proprietary studies and our existing and new non-exclusive studies.
We continue to strengthen our library of commercially available data. Recent agreements with our Russian partners will allow us to expand the Russian portfolio of Arctic data to include oil geochemistry and environmental base line studies. In addition, new gravity and magnetic data marketing agreements covering some CIS countries, Cambodia and Mexico have been entered into that will further enhance our global data holdings and provide new and exciting business opportunities.
The major South Atlantic study was completed in August 2008 and marketing started in September. Four other major studies are scheduled to be completed and marketed in the first half of the year (CircumߛArctic, East Africa, Taoudenni Basin, and South East China) and further studies are in various stages of planning and commencement.
Overall, staffing is unlikely to grow as quickly as in previous years although we are still seeking a number of scarce specialist staff.
Board changes
The Board changes announced in last year's Annual Report have worked out extremely well and have contributed to the smooth and efficient running of the Company. The appointment of the Chief Executive Officer, with a mix of management and strategic responsibilities, has facilitated creation of the role of Executive Chairman, with responsibilities including expanding our database and generating new business links worldwide.
The benefits from these changes are beginning to show, particularly in areas such as the new data agreements referred to previously. Also, we have been active in identifying suitable companies for acquisition in the past twelve months although no acquisitions have yet been secured.
Our strong link with IP Group plc, the University linked company that helped us to float on AIM, has resulted in the appointment of a new nonߛexecutive Director from IP Group plc, with effect from 4 September 2008, to further strengthen the GETECH Board.
Finally we would like to thank all GETECH staff and our Board colleagues for their unstinting efforts on behalf of the Company, which have made it a company that people want to work for. We look forward to the new challenges that the future years will bring.
Professor Derek Fairhead
Executive Chairman
Raymond Wolfson
Chief Executive Officer
Consolidated income statement
for the year ended 31 July 2008
| 2008 | 2007 | ||
| Note | £ | £ | |
| Revenue | 4,125,981 | 3,561,159 | |
| Cost of sales | (940,420) | (970,532) | |
| Gross profit | 3,185,561 | 2,590,627 | |
| Administrative costs | (2,363,929) | (1,944,174) | |
| Operating profit | 821,632 | 646,453 | |
| Finance income | 78,612 | 158,946 | |
| Finance costs | (244) | - | |
| Profit before tax | 900,000 | 805,399 | |
| Income tax expense | (298,429) | (300,968) | |
| Profit for the year attributable to equity holders of the parent | 601,571 | 504,431 | |
| Earnings per share | |||
| Basic earnings per share | 5 | 2.17p | 1.82p |
| Diluted earnings per share | 5 | 2.17p | 1.82p |
Consolidated statement of recognised income and expense
for the year ended 31 July 2008
| 2008 | 2007 | |
| £ | £ | |
| Profit for the year | 601,571 | 504,431 |
| Currency translation differences | 28,156 | (21,771) |
| Tax on items taken directly to equity | (6,963) | - |
| Net expense recognised directly in equity | 21,193 | (21,771) |
| Total recognised income and expense for the year attributable to equity holders of the parent | 622,764 | 482,660 |
All activities relate to continuing operations.
Consolidated balance sheet
as at 31 July 2008
| 2008 | 2007 | ||
| Note | £ | £ | |
| Assets | |||
| Nonߛcurrent assets | |||
| Property, plant and equipment | 2,791,331 | 2,800,587 | |
| Goodwill | - | 1,054 | |
| Deferred tax assets | 37,000 | 60,000 | |
| 2,828,331 | 2,861,641 | ||
| Current assets | |||
| Inventories | 440,978 | 192,592 | |
| Trade and other receivables | 1,601,525 | 2,038,124 | |
| Cash and cash equivalents | 1,687,632 | 942,622 | |
| 3,730,135 | 3,173,338 | ||
| Total assets | 6,558,466 | 6,034,979 | |
| Liabilities | |||
| Current liabilities | |||
| Trade and other payables | 1,766,834 | 1,421,853 | |
| Current tax payable | 98,673 | 250,000 | |
| 1,865,507 | 1,671,853 | ||
| Nonߛcurrent liabilities | |||
| Deferred tax liabilities | 40,986 | - | |
| 40,986 | - | ||
| Total liabilities | 1,906,493 | 1,671,853 | |
| Net assets | 4,651,973 | 4,363,126 | |
| Equity | |||
| Equity attributable to shareholders of the parent | |||
| Share capital | 69,231 | 69,231 | |
| Share premium account | 2,460,927 | 2,460,927 | |
| Capital redemption reserve | 6 | 6 | |
| Share option reserve | 132,775 | 79,000 | |
| Currency translation reserve | (578) | (21,771) | |
| Retained earnings | 1,989,612 | 1,775,733 | |
| Total equity | 4,651,973 | 4,363,126 |
P F H Stephens
Director
Consolidated cash flow statement
for the year ended 31 July 2008
| 2008 | 2007 | ||
| Note | £ | £ | |
| Cash flows from operating activities | |||
| Profit before tax | 900,000 | 805,399 | |
| Shareߛbased payments | 53,775 | 41,000 | |
| Depreciation and amortisation charges | 73,536 | 33,547 | |
| Impairment loss recognised | 1,068 | - | |
| Finance income | (78,612) | (158,946) | |
| Finance costs | 244 | - | |
| Exchange adjustments | 28,040 | (20,559) | |
| (Increase) in inventories | (248,386) | (26,088) | |
| Decrease/(increase) in debtors | 496,599 | (1,230,219) | |
| Increase in creditors | 344,981 | 339,718 | |
| Cash generated from/(used in) operations | 1,571,245 | (216,148) | |
| Income taxes paid | (452,733) | (267,968) | |
| Net cash generated from/(used in) operating activities | 1,118,512 | (484,116) | |
| Cash flows from investing activities | |||
| Purchase of property, plant and equipment | (64,178) | (2,797,078) | |
| Interest received | 78,612 | 158,946 | |
| Net cash generated from/(used in) investing activities | 14,434 | (2,638,132) | |
| Cash flows from financing activities | |||
| Equity dividends paid | 4 | (387,692) | (276,923) |
| Interest paid | (244) | - | |
| Net cash (used in) financing activities | (387,936) | (276,923) | |
| Net increase/(decrease) in cash and cash equivalents | 745,010 | (3,399,171) | |
| Cash and cash equivalents at beginning of year | 942,622 | 4,341,793 | |
| Cash and cash equivalents at end of year | 1,687,632 | 942,622 |
Notes to the financial statements
for the year ended 31 July 2008
1 Nature of operations
The principal activity of GETECH Group plc and its subsidiary company Geophysical Exploration Technology Inc. (collectively "GETECH" or "the Group") is the provision of gravity and magnetic data, services and geological studies to the petroleum and mining industries to assist in their exploration activities.
2 General information
GETECH Group plc, a limited liability company, is the Group's ultimate Parent Company ("the Parent Company"). It is incorporated in England and Wales and domiciled in England (CRN: 2891368). The address of its registered office is Convention House, St. Mary's Street, Leeds LS9 7DP. Its principal place of business is Kitson House, Elmete Hall, Elmete Lane, Leeds LS8 2LJ. GETECH Group plc shares are admitted to trading on the London Stock Exchange's AIM.
3 Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Accounting Standards (IFRS) in issue as adopted by the European Union (EU) and as issued by the International Accounting Standards Board.
GETECH's consolidated financial statements were prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice (UK GAAP)) until 31 July 2007. The date of transition to IFRS was 1 August 2006 and the comparative figures in respect of 2007 have been restated to reflect changes in accounting policies as a result of adoption of IFRS. The disclosures required by IFRS 1 'Firstߛtime adoption of International Reporting Standards' concerning the transition from UK GAAP to IFRS are given in the reconciliation schedules and are presented and explained in the notes to the accounts..
These consolidated financial statements have been prepared under the historical cost convention.
The accounting policies set out below have been applied consistently throughout the Group for the purpose of preparation of these consolidated financial statements.
The Parent Company financial statements have been prepared using United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and are on pages 38 to 41 of the accounts.
4. Dividends
| 2008 | 2007 | |
| £ | £ | |
| Paid during the year | ||
| Final dividend in respect of the year ended 31 July 2007 at 0.8p per share (2006: 0.6p) | 221,538 | 166,154 |
| Interim dividend at 0.6p per share (2007: 0.4p) | 166,154 | 110,769 |
| 387,692 | 276,923 | |
| Proposed after the year end (not recognised as a liability) | ||
| Final dividend in respect of the year ended 31 July 2008 at 0.7p per share (2007: 0.8p) | 193,846 | 221,538 |
The proposed final dividend per share for the year ended 31 July 2008 is subject to approval by shareholders at the Annual General Meeting on 27 November 2008.
5. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group by the weighted average number of the Ordinary Shares in issue in the year.
| 2008 | 2007 | |
| Profit attributable to equity holders of the Group | £601,571 | £504,431 |
| Weighted average number of Ordinary Shares in issue | 27,692,307 | 27,692,307 |
| Basic earnings per share | 2.17p | 1.82p |
All options in issue at 31 July 2008 and 31 July 2007 were antiߛdilutive.
6. Annual Report and Accounts
The Annual Report and Accounts will be dispatched to shareholders, and available from its website (www.getech.com) on 3 November 2008.
7, Annual General Meeting
The Annual General Meeting of GETECH Group plc will be held at 12noon on 27 November 2008 at Kitson House, Elmete Hall, Elmete Lane, Leeds LS8 2LJ